Worldwide Asset Purch., LLC v Smith2017 NY Slip Op 31248(U)

June 6, 2017Supreme Court, Suffolk County

Docket Number: 20381/05Judge: Thomas F. Whelan

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SHORT FORM ORDER copy INDEX.No. 20381 /05

SUPREME COURT - STATE OF NEW YORK IAS PART 33 - SUFFOLK COUNTY

PRESENT: Hon. THOMAS F. WHELAN

Justice of the Supreme Court

---------------------------------------------------------------)( WORLDWIDE ASSET PURCHASING, LLC,

Petitioner,

-against-

ROSEMARY A. SMITH, Respondent.

----------------------------------------------------~----------)(

MOTION DATE: None - Sua Sponte CDISP: YES

HARRIS BEACH, PLLC Attys. For Petitioner 99 Garnsey Rd. Pittsford, NY 14534

MITCHELL L. PASHKIN, ESQ. Atty. For Respondent 775 Park Ave. - Ste. 255 Huntington, NY 11743

Upon the following papers numbered I to 2 l read on the court's own motion pursuant to 22 NYCRR Part 130-1, to determine whether monetary sanctions and/or costs in the fonn of attorneys fees should "be imposed against counsel representing respondent Smith in connection with her prior application (#002) to vacate the judgment entered herein and certain and post judgment collection proceedings, said motion having been made on notice in the court's order dated March 31, 2017 which order is hereby numbered 1-8 ; an~ upon a reading of the opposing submission of defense counsel dated May 10, 2017 as to the imposition of any such sanction or costs which is hereby numbered 9- 15; and a read ing of the plaintiff's submission hereby numbered l 6-21 (and atte1 hear i11g eo1:1nsel in s1:1pport ttnd oppo:sed to the lllOtion) it is,

ORDERED that after hearing counsel on this court' s own motion pursuant to 22 NYCRR § 130-1.1 [ d], to determine whether an award of costs in the form of reimbursement of actual expenses reasonably incurred and attorney's fees or the imposition of monetary sanctions as contemplated by 22 NYCRR § 130-1.l[a] is warranted due to the defense counsel's, Mitchell L. Pashkin, Esq., engagement in frivolous conduct as that term is defined in 22 NYCRR § 130-1.1 [ c ](l) and (3), by reason of his conduct in pursuing those portions of the respondent's prior motion (#002) to vacate on in personam jurisdictional grounds, the judgment entered herein on November 9, 2005, after defense counsel became aware of the falsity of the factual premise upon which such application was based thereby rendering it without basis in fact or in law, the court finds that attorney, Mitchell L. Pashkin, Esq., is responsible for the payment of $2,500.00 to the petitioner's counsel as and for the reimbursement of attorney's fees reasonably incurred in defending against the respondent's application to vacate the judgment and other proceedings due to a purported lack of personal jurisdiction over the respondent; and it is further

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ORDERED that defense counsel, Mitchell L. Pashkin, Esq., is directed to pay the sum or $2,500.00 herein awarded to the petitioner. which amount the Court hereby finds to be the appropriate and reasonable awmd lo be imposed by reason of defense counsd 's engagt:mcnt in frivolous conduct in pursuing the application to vacate under the circumstances described above. within thi1ty (30) days alter the petitioner's service or a copy of this order with notice of its entry.

In August of 2005. the petitioner commenced this special proceeding for an order confirming a June 14. 2004 arbitration award in the amount o f $23,712. 9 l in favor of the petitioner against the respondent, Rosemary A. Smith. By order dated October 28, 2005, this court granted the unopposed petition, as the respondent failed to appear herein by answer. That order was docketed as a judgment by the Clerk on November 9, 2005. i:ollowing an assignment o[ the judgment by the petitioner to Galaxy Portfolio, LLC in 2015, the plaintiffs counsel issued an Income Execution in March of20 I G which the Suffolk County Sheriff executed upon the respondent's employer in November of2016.

ln response to the service orthat Income Execution, the respondent retained attorney Mitchell I .. Pashkin, Esq., to interpose a motion (#002) to vacate said Income Execution and other proceedings had herein including the post judgment issuance of th~ incom~ execution. ln the Order to Show Cause dated December 2.1016 I Molia, Jl by which the respondent's motion (f/002) was interposed, the relief requested "'as premised upon the following grounds: I) that the October 28. 2005 order confirming the arbitration award that was docketed as a judgment on November 9. 2005 was void due to a lack of personal jurisdiction over the respondent; 2) that said order and judgment and the respondent's underlying default in answering was subject to vacatur under the discretionary excusable default grounds contemplated by CPLR 50 l 5(a)(l) with leave to appear by answer; and 3) that the income execution was void due to a failure to notify the respondent of the assignment ofjudgment and because it was issued by a dissolved corporation. These grounds were enlarged in the supporting affirmation of respondent's counsel to include a non-noticed claim for a vacatur of the October 28, 2005 order, docketed as a judgment on November 9. 2005. for lack of'"su~ject matter jurisdiction" by vi1tue ora purported lack or standing or capacity to sue on the part of the petitioner.

In support or her motion to vacate (#002), respondent Smith advanced the following factual avermcnts in an affidavit dated November 29. 2016:

I. Within the last 2 weeks my employer informed me of its receipt of the Income Execution attached as Exhibit A. Sometime prior lo this I had received this income Execution from the Sheriff.

2. f1efore I received this Income Execution, I had no knowledge that I had been sued or there was a judgment (Exhibit 13) against me.

3. Before I received this Income Execution, J never heard of Wor!tl Wide /\sset Purchasing, LLC or its attorney. Harris Beach PLLC.

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4. My attorney informs me that Worldwide Asset Purchasing, LLC and its former attorneys. Fabiano & Associates. P.C. obtained the Judgment against me pursuant to a Petition (Exhibit C) filed in August of2005 to confirm an Arbitration Award (Exhibit D) issued in June of 2004.

5. I was never served with the Petition to confirm Arbitration /\ward. l never was served with any court papers before l received the Income Execution issued attached as Exhibit A. Nobody ever came to my house to try to serve me with any papers. There were never any papers affixed to my door, I never received any legal papers in the mail before I received the Income Execution attached as Exhibit/\.

The petitioner on behalf of itself and its assignee, Galaxy Portfolio LLC fhereinafter Galaxy I. appeared in opposition to the..: respondent's motion for vacatur or the judgment (f/002), which opposition was set fo11h in cross moving papers (#003) by the petitioner. The affirmative relief sought therein was an o rder directing the Clerk to correct, nunc pro tune, the name of the assignee set forth in an Assignment of Judgment issued by the plaintiff in December of 2015. that was filed with the County Clerk on January 19, 2016 to reflect the true and intended identity of the assignee. or leave to file an amended assignment, nunc pro tune, to reflect the true and correct name of the assignee as Galaxy Portfolios, LLC. In support of these alternate demands for relief, the petitioner's counsel averred that under a written assignment dated February 19, 2015. the petitioner assigned its judgment to Galaxy Portfolio, LLC. the successor by purchase to the petitioner. but the original or said assignment was lost and thus never filed with the Clerk. In December of2015, a new Assignment of Judgment was executed by the petitioner. Due to a clerical error, however, this assignment erroneously named the petitioner as the assignee rather than Galaxy. 1t was, however, filed with the Clerk on January I 9. 2016 even though the petitioner. World Wide Assets. was listed as both the assignor and assignee.

The petitioner's opposition to the respondent's motion-in-chief (#002) consisted or documentation and an affirmation of the petitioner's original counsel who successfully prosecuted the petition for confirmation of the June 14. 2004 arbitration award in the amount of$23.7 l 2.9 l in favor oflhe petitioner and secured a money judgment thereon by docketing the October 28. 2005 confirming order as a judgment in November of 2005. The documentation put before the court included a September 9. 2005 affidavit of service by a process server which reflected that respondent Smith was served with the notice of petition, petition and other initiatory papers on September 3, 2005 by personal delivery of such papers to her at her home pursuant to CPLR 308( I ).

In his December 6, 2016 affirmation, the petitioner's former counsel averred that in response lo such service. respondent Smith contacted him by phone in order to arrange a payment schedule and thereafter appeared al his oJ1icc and executed a document underoath entitled "Aflidavit of Confession of .Judgment" dated Septemb~r 21, 2005, which bears the caption and index number of this special proceeding. Therein, the respondent submitted to the jurisdiction of this cou11 with respect to this special proceeding and agreed to pay the petitioner the sum of $200.00 a month beginning on

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Sl!ptembcr 30. '.W05. until the amount owed undcr the arbitration award was paid in full. Continuing. the petitioner's original counsc.l avers that respondent Smith paid a total or $1,000.00 on the debt. However, the payments made were untimely and otherwise not in keeping with the terms of the Anidavit of Confession of Judgment.

The foregoing factual a,·ennents of the petitioner"s original counsd regarding his initial telephone contact with respondent Smith in September of2005 and her execution of the Affidavit of Confession of Judgment dated September 21, 2005 under oath in the offices of plaintiff's original counsel together with the content of such affidavit and the factual avenncnts set forth in the September 9, 2005 affidavit of the petitioner's process server, flatly contradict several or the factual avermcnts set forth in the respondent's November 26, 2016 supporting affidavit wherein she claimed that: I) ··Before I received this Income Execution, l had no knowledge that I had been sued or there was a judgment (Exhibit B) against me"; 2) ''Before I received this Income Execution, I never heard of World Wide Asset Purchasing. LLc· .... : and 3) '·J was never served with the Petition to confirm Arbitration /\ward'' and ··1 never was served with any court papers before T received the Income Execution issued attached as Exhibit A.,.

The respondent's reply to the petitioner· s opposit ion to the respondent· s motion-in-chicf (/1002) took the form of an unsworn and una11irmed Memorandum of14aw by defense counsel, Mitchell L. Pashkin, Esq. Therein, defonsc counsel failed to address, let alone challenge in any manner. the factual avermcnts set forth in the September 7, 2005 affidavit of the petitioner's process server evidencing personal service of process upon the petitioner on September 3, 2005 pursuant to CPLR 308( l ). In addition, the reply Memorandum of Law failed to address or challenge the content or authenticity of the September 21, 2005 ··sworn to·· Affidavit of Confession of Judgment, in which. the respondent submitted to the jurisdiction of this court with respect to this special proceeding and agreed to pay the petitioner the sum of $200.00 a month beginning on September 30, 2005 until the amount owed under the arbitration award was paid in full. Also not addressed nor contested by defense counsel were the factual avcrmcnts set forth in the affirmation of the petitioner's original counsel in which he detailed the circumstances surrounding the respondcnl's contacts with his office following service of process. including her execution or the September 21 , 2005 Affidavit of Confession of Judgment and her payment of monies towards the outstanding balance f(>r a short time after the execution of said Affidavit. Instead. the reply Memorandum was dedicated to contesting the petitioner· s cross moving (#003) demands for a nunc pro tune correction or the assignment filed with the Clerk in January of 2016 and to the rcspondenrs claim that the court lacked subject matter jurisdiction because the pctition~r. a foreign corporation. was not authorized to do business in New York.

In an order dated March 31. 2017, this court denied the respondent' s motion ror a vacatur or the j u

Worldwide Asset Purchasing, LLC v Smith Index No. 20381/2005 Page 5

slam.ling on the part or the petitioner that was premised upon petitioner·s status as a foreign corporation doing business without authority, as such lack of authority. if any, is noljurisdictional in nature .. Instead, it is a matter concerning a lack of capacity to sue, which is an affirmative defense that was waived by the respondent ' s failure to raise it in a timely served answer or pre-answer motion (see id., at pages 5-6). Finally, the court found that the respondent failed to establish any basis for a discrctionary vacatur of the judgment and proceedings had herein, as no reasonable excuse nor any meritorious defense was advanced in the moving papers (see id. , at page 6).

[nits March 3I,2017 order. the court addressed the petitioner's cross motion (#003) for nunc pro tune n:lieffrom the incorrect Assignment of.Judgment filed with the Clerk in January of2016 and granted those portions thereof wherein it sought leave to file with the Clerk an amended Assignment of Judgment reflecting the proper and intended assignee as Galaxy Portfolio, LLC (see id., at pages 6-7). The court went on to address several matters of grave concern that were readily apparent from the papers put before the court by the respondent and her counsel.

The first of these matters were the ractual avennents advanced under oath by respondent Smith in the November 29, 20 I 6 affidavit she put before this court in support of her motion (#002) regarding her purported lack of any knowledge of the existence of this special proceeding anytime prior to the Sheriffs service of the Income Execution dated March 14, 2016. The court noted that such avcrmcnts were llatly contradicted by those advanced in her September 21 , 2005 Affidavit of Confossion or Judgment and by the factual averments regarding the in-hand, personal delivery or the notice of petition and petition advanced in the September 9, 2005 affidavit of the petitioner's process server. The court also noted that factual averments set forth in the November 29, 2016 anidavit of the respondent were ilatly contradicted by the factual averments set forth in the December 6, 2016 affirmation of the petitioner· s original counsel concerning the respondent's telephone contact with him five days al"ler the notice of petition and petition were served upon her and the circumstances surrounding her execution of the September 21 , 2005 Affidavit of Confession of Judgment.

The court noted that the forgoing circumstances implicated conduct on the part of the respondent that may have been aimed at misleading the court. Such conduct included the putting forth. under oath, delusive factual averments regarding the respondent's purported absence of any knowledge of this action for a period of twelve years following its commencement and the purported lack of service of process upon the respondent. Also noted was that the failure ofrespondent Smith to address the petitioner's testimonial and documentary evidence that directly refuted the factual avermcnts set forth in the rcspondenrs November 29, 2016 affidavit in any manner. Such a lliilure was found to have transformed the implication that false facts were put before this court into a presumption. The court went on to advise the respondent it might direct a referral of the record of this proceeding to appropriate law enforcement officers for purposes of determining whether any crimes were committed.

Also not

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from the unchallenged factual avcrmcnts s~t forth in the affidavits/affinnations and docum~ntation submitted by the petitioner in opposition to the respondents' motion. including the Scptembcr2 I. 2005 Arridavit or Confession or .Judgment (see id. , at page 8) The court noted that the reply papers submitted by counsel took the Corm ofan unswom and unafiirmed ·'Memorandum of Law" which was silent with respect to petitioner's submissions regarding the respondent Smith's participation in the proceeding in September of 2005. By virtue of this conduct, the factual averments set forth in the petitioner's opposing papers. including the affirmation or its original counsel. the affidavit of its process server and those set forth in the September 21. 2005 /\ ffidavi t of Confession of J udgmem. were found to have been essentially admitted by the respondent and her counsel.

In light orthe foregoing. the court went on to proclaim that defense counsel was under a duty to advise the court or lhe inability lo challenge the content or the petitioner· s opposing submissions and to withdraw so much of the respondent's motion (#002) that was predicated upon the llatly contradicted factual averments set forth in the November 29, 2016 supporting affidavit or the respondent (see! id, at page 9). h.forevcr, because the seemingly unveracious averments served as the principal predicate for respondent's application to vacate the judgment due to a purported lack or personal jurisdiction, dcfonse counsel's continuing pursuit of the remedy of a vacatur based upon the lack of personal jurisdiction rendered the pursuit of that remedy without any basis in fact or in law and thus constituted frivolous conduct within the meaning of22 NYCRR Part 130-J. l(c)(l) and (3). In addition, the court suggested that the conduct on the part of defense counsel in submitting the respondent· s >lovcm ber 26, 2016 aflidavit containing the false factual avcrments of his client spread doubt upon the veracity of the certification that defense counsel engaged in a pre-motion. reasonable inquiry into the non-frivolous nature of Lhe contentions advanced in the moving papers, which certification was executed by defense counsel and affixed to lhe legal back of the moving papers as contemplated by 22 NYCRR Parl 130-1.1-a.

ln the concluding paragraphs of its March 31, 2017 order, the court went on to declare that upon its own motion pursuant to 22 NYCRR § I 30-1. 1 (d), counsel for the respective parties were directed lo show cause why an order should or should not be made and entered imposing such sanctions and/or costs, if any. against Lhc respondent's counsel pursuant to 22 NYCRR § 130 -l. I (c), as the court might find to be appropriate. hy counsels' respective submissions orai) afTi1mation and/or artidavit on that issue to the C'hambcrs of the unders igned and by serving a copy of the same on each other on or before May 12. 2017. Counsel for the responden t and counsel for the petitioner both complied with this directive and the court has read and considered the respective submissions with due deliberation. For the reasons s

Worldwide Asset Purchasing. LLC v Smith Index No. 20381 /2005 Page 7

1 i ligation. or to harass or ma! iciously inun.: another; or (3) it asserts material factual statements thal are false. In determining whether the conduct undertaken was frivolous, the court shall consider, among other issues. (I) the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct; and (2) v.hether or not the conduct was continued when its lack of a legal or factual basis was apparent. should have been apparent, or was brought to the attention or counsel or the party. An award of costs or the imposit ion or sanctions may be made either upon motion of a parly in compliance with CPLR 2214 or 2215 or upon the court ·sown initiative. after a reasonable opportunity to he heard (see 22 YCRR § 130.1 f d I).

I Jere, the court reiterates its finding that defense counsel, Mitchell L Pashkin, Esq., engaged in frivolous conduct as that term is defined in 22 NYCRR § 130-1.l(c)(l) and (3) since the respondent' s motion (#002) to vacate the judgment and other proceedings had herein, to the extent premised upon a purported lack of personal jurisdiction were: 1) completely without merit in law and could not be supported by a reasonable argument for an extension, modification or reversal orcxisting Jaw; and 2) premised upon the respondent's assert ion or material factual statements that were folsc. This finding is predicated upon the following circumstances: I) attorney Pushkin's failure to address in his opposing/reply memorandum or law dated March 3, 2017. the assertion of material facts by his client regarding her purported lack or knowledge or the existence of this special proceeding and the purported lack or service of process upon her. the falsity of which, became known to attorney J>ashkin upon the petitioner's production of the Affidavit of Confession of Judgment executed hy the respondent in September of 2005 an

Worldwide Asset Purchasing. LLC \.Smith Index >lo. 2038 1/2005 Page 8

no dctaikd time sheets were kept. Counsd ncvcrthclcss cstimal\.:s that thirty hours or WLH'k were expended and that an hourly rate of her fee is lixcd al $300.00. While the amount of $9,000.00 may properly reflect the thi11y hours of work the petitioner's counsel expended in preparing the cross moving papers (#003) in response to the respondcnt 's motion (#002) to vacate the judgment and other proceedings had herein. not all of the time expended by counsel was dedicated to defending those portions orthe respondent's motion (#002) to vacate that have been found have rested upon frivolous conduct. Interposition or the petitioner"s cross motion (#003) containing opposition lo the respondent's motion rather than opposing papers alone was necessary to secure relief in favor or the petitioner alone and playcd no role in defending against the portions of the respondent's motion-in-chicfthat was frivolously interposed and/or advanced by the respondent and her counsel. /\ccordingl y. the cou11 discounts one half or the $9,000.00 foe amount as not attributable to Cri volous conduct on the part ofattorney Pashkin. Out of the remaining $4,500.00 po1iion of the petitioner's Jee, more than half thereof was dedicated to defending against the respondent's demands for vacatur of the judgment on thc ground of a lack of personal jurisdiction over her.

The court thus finds, pursuant to 22 YCRR § 130-1.2, that an award of costs in the amount of $2,500.00 in favor of the petitioner is appropriate under the circumstances of this case, as such award is limited lo the attorney's fees incurred by the petitioner in dcl'cnse of those portions of the respondent's motion wherein she sought a vacatur of the judgment and all other proceedings due lo the purported lack of personal jurisdiction over said respondent. Defense counsel shall remit payment of the sw11 of$2,500.00 awarded costs in the form of counsel fees in favor of the petitioner"s counsel

pursuant lo 2: N) Y

2

C

0

' R

1 7

R § 130-1.1.( I) and (2) as directed above. ~· .

Dated: June bl . -{{;)i __ . lH~~VI ,L , .-S.-C-. --

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